Good day, and welcome to the Getinge Capital Markets Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mattias Perjos. Please go ahead, sir.
Thank you very much. Good morning, everyone. Welcome to the conference call this morning. Thanks for joining. Together with me, I have the President and CEO of Arjo, Joacim Lindoff, who will present Arjo briefly during the call today, and we're also supported by Niclas Sjöswärd , the interim CFO of Getinge, and Jonas Lindqvist, the CFO of Arjo. If we move to the following page with the agenda, you can see we will have, we'll start the conference call this morning with a brief description of the proposal that the board of directors has made to distribute and list Arjo.
We will also present the different companies, and we will talk about updated financial targets as well, and we will end the session with a Q&A. With that, we can move to page number three, which describes the distribution and listing of Arjo. Earlier this morning, the board of directors of Getinge made the formal decision to propose a distribution and listing of Arjo, representing approximately 1/4 of Getinge Group sales today. We've been over the rationale behind this quite a few times already, and nothing has changed in this regard.
It originates from the fact that we the board of directors believe that the businesses will perform better with a stronger focus on dedicated management both in terms of generating the growth that's possible, given the markets that we're active on, and also work on a number of the operational challenges that we have in both businesses. So the spin-off as such is 26% of sales and 24% of rolling twelve months adjusted EBITDA, and that's through the third quarter of 2017.
The timeline for this, if we go back in history, was on the eighteenth of October 2016 that the intention to the spin-off was announced. Since then, a lot of work has been done, and since the first of April this year, Arjo has been operating as an internal standalone company within the Getinge group. We've reached a point today where we're launching the transaction and also publishing the prospectus for the transaction. A couple of key dates going forward. The main one is the fourth of December, where there will be an extra general meeting to decide on the spin-off.
If the decision is to from the shareholders to go ahead with the spin-off, the first day of trade in Getinge in the Getinge share, excluding Arjo, will be on the seventh of December, with eighth of December as the record date to receive shares in Arjo. The first day of trading for the Arjo share is planned to twelfth of December. That's an overview of the proposal today, and with that, I suggest we move over to page four, and I would like to hand over to Joacim Lindoff, who will give us a brief introduction to Arjo.
Thank you, Mattias, and good morning, everyone. I will take around 15 minutes of your time to provide you with a brief update on Arjo as a standalone company. Please let us move to the next slide. Let me start then by, Next slide, please. Thank you. Let me start by giving you a quick overview of the Arjo business to set the scene. In our business, we are committed to improving the everyday life of people affected by reduced mobility and age-related health challenges, such as dementia. In 2016, sales amounted to approximately SEK 7.8 billion for Arjo, as it stands to be listed. We are more than 5,900 employees worldwide, and we have presence in over 60 countries with headquarters here in Malmö, Sweden.
We have six efficient production facilities, a footprint set up that over the last few years has undergone extensive reduction and today is serving as a good base for further expansion. We sell our products and solutions to two distinct customer segments: acute care and long-term care. Out of the sales in 2016, acute care represented 67% and long-term care, 33%. We have divided the market into three geographical areas: North America, Western Europe, and rest of the world, representing 37, 48, and 15% respectively. We have a fairly high share of recurring revenue, 60%, and it's generated from aftermarket related goods and services, such as consumables, spare parts, maintenance, along with our rental business, which is 25% of our total business in 2016. Sales of capital goods represents the remaining 40.
Our offering includes products and solutions within the product categories, patient handling, hygiene, disinfection, medical beds, therapeutic surfaces, prevention of venous thromboembolism, and diagnostics. In addition, we offer complementing aftermarket services, as we just mentioned. With that, we move on to the next slide. You will hear me mention the word focus a number of times, and focus is used in so many settings and sometimes considered to be just a buzzword. So therefore, I would like to spend some minutes on this slide explaining what we really mean by stating that the spin-off will entail an increased focus for Arjo. Following the strategic direction in 2015 to integrate Getinge's three business areas, the group gravitated towards the dominant customer segment, acute care, in terms of three factors.
Strategic focus, where a standalone Arjo with a dedicated management and board of directors now will, in addition to acute care, be able to capitalize on the faster-growing long-term care segment. Portfolio focus, where a standalone Arjo will be able to prioritize R&D projects and inorganic opportunities relevant to our strategic intent and nothing else. And sales and service focus, where a standalone Arjo with a devoted sales and service representation now will be able to better cater for customers' needs across customer segments and product categories.
By that, we move on to the next slide, where I will give you some more details on the actual business. Starting off with what we see as the investment highlights and the strength and competitive advantages in Arjo, which all of them will enable us to realize our strategy and achieve our financial targets. We operate on a growing market driven by favorable mega trends. We have a complete, acute, and long-term care offering with strong market positions and potential to expand, especially in long-term care. We have a global business platform with low operational risk.
Our footprint project is to a large extent done, and we have limited high-risk investments in front of us. We have a proven business model with sustained competitive advantages that can be further accelerated with the focus that I just discussed. We have a well-identified strategic plan, supported by a strong governance structure and a long-term and committed principal owner. Let me now provide you with some more information on these investment highlights. Moving on to next slide, where we can see that global demand for healthcare, and consequently, the market for our products and solution, is heavily influenced by global mega trends.
These trends range from demographic shifts with an aging population and an increase of lifestyle-related and chronic diseases, such as obesity and dementia. The global trends are expected to result in an attractive long-term growth of Arjo's markets. We are today active on a SEK 65 billion global market that is expected to grow to a SEK 80 billion market by 2022, which corresponds to an annual growth of 4%. The market growth is different between geographies, where the developing countries are expected to grow at a higher rate, especially in acute care. Our current exposure is, however, primarily in developed countries that are expected to grow some 2%-4% annually, with main growth coming from the long-term care space. In summary, we see good opportunities in a market with overall stable and long-term growth. Next slide.
We are one of the leading players in our market space, and we offer a broad product portfolio with additional services. We divide our offering into eight product categories, covering, among others, patient handling solutions, including lifters and slings, bathing and showering systems for safe and dignified personal hygiene routines, medical beds, pumps and garments to prevent deep vein thrombosis, mattress systems to prevent pressure ulcers, diagnostics equipment within obstetric and cardiac, disinfection solutions for infection prevention, and an extensive aftermarket offering to complete our lifecycle commitment. The product categories, patient handling and therapeutic surfaces, represent the largest shares of sales in 2016, with 21% each, followed by the category medical beds. A few comments on the different categories with patient handling that is expected to grow in developed markets where we have high exposure.
This category is characterized by high share of consumables, such as slings, and we see good opportunities for solution selling with our broad product portfolio. The medical beds business is primarily driven by high growth in emerging markets in the value segment, where we have limited exposure today. However, we see further opportunities in long-term care and obviously to continue to develop our high-end offering. Our VT category, where we offer a comprehensive range of vascular therapy pumps and garments, has its growth driven by our sales in North America, but here we see opportunities to disrupt the drug market in other geographies. This category is categorized by high share of consumables, but it is also a highly competitive category.
Finally, we consider ourselves to be one of, or even the market leader in our defined categories, and we see good potential both to develop market shares incremental and the market as such in the years to come. By that, we go on to next slide. Arjo has, over the years, implemented a number of measures to maximize economies of scale, for example, consolidating production units and establishing centers for research and development. Our focus on efficiency enhancements and optimization of manufacturing capacity, distributions, and sales structure has created a strong value chain that today is fit for purpose, but also scaled to accommodate higher volumes. We have obviously also established a strong, robust, and proactive quality system throughout this business.
Our production facilities located across the world are supported by warehouse and distribution centers to enable short lead times to end customers. Components are purchased by a centralized purchasing unit that performs detailed controls to ensure short lead times, quality, and obviously satisfied customers. Overall, we have a well-invested production platform with six efficient manufacturing facilities, which will drive sustained future operating leverage. Next slide. Our intention is to invest to become the global market leader in long-term care while retaining a strong market position in acute care. The ambition is also to achieve a position as preferred solution provider with clear, positive financial outcomes for our customers that contributes to sustainable healthcare system.
To achieve this, we have developed a business plan, the Arjo 2020, which includes a number of initiatives to strengthen commercial focus, increase efficiency, and strengthen the product portfolio. I would like to highlight a few initiatives from this plan. One key initiative is to turn around our U.S. business, which is really important to us.
The plan includes, among others, well-defined activities to improve our rental business performance, as well as investments to regain market leadership within long-term care. In addition, we have initiatives where detailed plans are already in motion to capitalize on the, for us, under-penetrated markets such as Japan, China, and India. Another important area is digitalization. We have a broad palette of internal activities to drive the digital agenda, and in addition, we are obviously exploring partnerships to complement our offering of integrated solutions. We intend to further increase efficiency in our supply chain and operation setup, and we'll continue to drive focus on potential savings in indirect and direct purchasing. In addition to the organic growth initiatives, we will obviously also continuously evaluate strategic and bolt-on acquisitions that support the overall strategic direction.
We have a track record of M&A activities, and we have a well-defined funnel of potential targets for the years to come. However, very importantly, it is important to say that these targets should fit our strategic intent and should give us good opportunities to integrate in a positive and smooth way. In summary, we have a well-defined, focused, and implementable plan that we feel comfortable will drive portfolio leadership and market presence to secure our midterm net sales and EBITDA targets. Moving on to next slide. With our business plan, Arjo 2020, we will transform revenue composition in three ways, which should result in a sustained increased profitability and robustness. We will do this by a transformation of customer segment split, geographical split, and split of revenue type.
We will reestablish market leadership within long-term care while maintaining the leading position in acute care in our related product categories. We will increase exposure in higher growth developing markets, increase our business in North America, especially as said, in rental and long-term care, while actively navigating in Western Europe to keep, and where possible, expand market shares. Finally, we will put stronger focus on establishing lifetime customer relationships in order to capture full service and consumable opportunities in the relevant categories.
Moving on to next slide. On our midterm financial targets, where the Arjo board of directors have adopted the following midterm financial targets: an annual organic sales growth of 2%-4%, an annual EBITDA growth of at least 10%, and a cash conversion that is exceeding 70%. Base year is full year 2017 for net sales and the EBITDA growth targets.
The board and management base these financial targets on the established business plan, including factors such as growth in our primary markets. Furthermore, growth is expected to be driven by strategic initiatives, for example, the U.S. turnaround plan and an intensified operational focus, driven by the distribution and separation from Getinge. The main reason for the board to decide on a move to EBITDA growth instead of previous EBITDA targets, is that this better reflects Arjo's business, which is characterized by generating strong cash flow. The target for cash conversion aims to control the activity against efficient utilization of resources, and also this to focus on the importance of cash flow. Furthermore, the board of directors has adopted a dividend policy, where future dividends will be adjusted in line with Arjo's profit level, financial position, and future development potential.
The aim is for the dividend to correspond to 30%-50% of net income after tax. Our business plan for the independent Arjo is taking into account our specific opportunities, but also our challenges. We must recognize where we are coming from and understand and address some areas, especially in the U.S. and the U.K., where we have seen decline in business over the last years.
Based on this, I believe that we have set the scene with a solid plan to reach our financial midterm targets in a sustainable way. Next slide, please. And, before we move into the financials, I would like to mention a few words on the management team and the board of directors. We have a dedicated, experienced, and I must say, diverse management team that will drive the future of Arjo, together with a great team of colleagues in the organization.
This is supported by a very committed principal owner in Carl Bennet, and the board of directors, which is representing deep knowledge about Arjo as a company, but also of the MedTech business, with Johan Malmquist as chairman of the board. With our Arjo team and the skilled and committed board of directors, I am confident that we will enable a favorable and sustainable development of Arjo. So moving on to the next slide, and to the numbers. I would like to provide a picture of what Arjo is as a standalone company from a financial perspective, to give you the right prerequisites when preparing and comparing the numbers. The baseline for Arjo's financials is the information that has historically been presented as the business segment Extended Care, or, and later, PPAC within Getinge.
To this, the adjacent product category, flusher disinfection, has been added, which previously belonged to Getinge Surgical Workflows, but where sales was done mainly through the Arjo sales channels. Also, compared with being a Getinge business area, certain new functions and processes have been established that will obviously lead to higher administrative costs as Arjo becomes a standalone company. The majority of the standalone functions have gradually been built up during 2017, in combination with investment in our customer-facing parts, and these costs will have full year effects in 2018. So let's move on to the next slide, which is a snapshot of our financials. Let me start this slide with the net sales development, which has been on a downward trend during the last years. The negative development is driven by a combination of factors.
One is the lost focus on long-term care business, as mentioned a couple of times before, but it's also related to a challenging performance in our rental business. The negative development was partly due to a declining market, but also because we did not fully manage to integrate the TSS business that was acquired in 2012. We have also experienced lower volumes within our hygiene category and an increase in competition within VTE and pressure ulcer prevention. In addition, we have experienced a downturn in the UK, one of our largest markets, and the trend in the UK is partly attributed to the lower investments that the National Health Service has done over the last couple of years.
However, growth and profitability trajectory is reversing with a positive momentum, with good order intake in Q3 on several key markets, such as, for example, the US. It's also worth mentioning in this context, that the discrepancy between organic and reported net sales is largely driven by currency effects. Finally, a few words on the capital structure. The external financing for Arjo is in place, and we will be at around SEK 4.4 billion of net debt at listing. If you look at our rolling 12 months, the adjusted EBITDA margin is 18.3%. The rolling 12 months net debt versus adjusted EBITDA will give us a leverage of approximately 3.1. We have, as previously stated, truly recognized the need to understand why we have seen a declining net sales over the last few years.
We put plans in place based on that to turn the trend and perform to our new net sales and EBITDA growth targets. I feel confident that we have a sustainable plan in place, supported by the board of directors, that gives us, as an organization, good possibilities in developing our organization long term. Next slide, please. Before I hand over to Mattias again, I would just like to revisit the investment highlights.
We are recognizing where we are coming from, but we see great opportunities going forward when we will be able to focus and further develop the Arjo business as a standalone company. We are active on a growing market with attractive fundamentals. We have long-term global customer relations, a broad offering with strong market positions. We have a global business platform with an efficient supply chain footprint and with low operational risk.
All in all, we have a solid foundation to build on and a great team of colleagues to lead us into the future. By that, I hand over to Mattias again.
Great, thank you, Joacim. If we move then to, we can move directly to slide 19 to have a look at what Getinge will look like after the spin-off is completed. So from 2018, we'll still be a company in leading positions in well-defined segments. We have an addressable market of approximately SEK 170 billion, and with growth rate similar to Arjo in the 2%-4% range over the next few years. We also have a product portfolio that is focused on the operating rooms specifically and the adjacent areas in the hospital.
The reason for the focus on the operating room is that 80% of the value in a hospital is created in the operating room, but it's important to be seen as a good end-to-end partner to our customers by having offers in the adjacent areas as well, that you can see on slide number 19. When it comes to the value that we bring to patients and hospitals, it's really twofold. One is improving the outcomes of our therapists and in order to both have a better clinical outcome, but also reduce the length of stay for patients in the hospital.
The second leg of this is to is the hospital productivity play, where we help our customers improve efficiency and also minimize hospital-acquired infections, which is a huge issue globally in our customers. Getinge from 2018 as well, after the spin-off, we'll have just over 10,000 employees worldwide. We'll have a sales footprint with sales into over 150 countries, and the sales volume on a rolling twelve-month basis will be SEK 22.6 billion. With that, I'd like to move over to elaborate a little bit on the value proposition.
So if we move to slide number 20, about 90% of the Getinge sales will go to hospitals from 2018 after the spin-off of Arjo. We focus on focusing, as I said, on improving outcomes and reducing the length of stay and improving efficiency and minimizing hospital-acquired infections. I would just like to give a couple of simple examples of what we do and how this is relevant for our customers. If you look at, for example, our endoscopic vessel harvesting, the technique that is used when doing a coronary artery bypass grafting, and it's used as an alternative to open vessel harvesting. We have good evidence that EVH is better for both patients and for the healthcare systems.
There is research that shows that leg wound issues occur in 48% of the cases when you use open vessel harvesting, compared to only 4% when you use EVH. In addition to this, the recovery time is shorter. You typically need one day less for the patient in the hospital, and the cost reduction that comes with this. But in total, according to a UK study that was done, the cost is reduced by GBP 856 per patient and treatment, and this is for a procedure that happens several hundred thousand times a year among our customers. So by letting more of these patients use EVH instead of open vessel harvesting, we would see a significant positive impact on several dimensions.
So this is just one example to illustrate the left box here. When it comes to improving efficiency and productivity in hospitals, I'd like to give you an example from a university study in Denmark that shows that our solution brought a 19% increase in productivity in the emergency department. It brought a 15% higher utilization of the operating room and a 66% decrease in the number of canceled operations. So these are really significant numbers. And in real terms, this means that one or even sometimes more surgeries each day can be done with the same resources with a huge positive impact on our customers and the healthcare system.
In addition to this as well, our infection control is has a leading position when it comes to reducing the risk of getting infected inside the hospital when being treated for something else. This is a huge problem globally. There's a European Union-wide survey that has estimated that 3.5 million hospital-acquired infections occur every year just in European acute care hospitals. So this gives you a little bit of a flavor of the value that we provide to our customers, which we believe is really significant. With that, we can move to page 21, and we have two slides here on the financials after the spin-off. They've also been distributed as part of the press releases with details.
I won't spend too much time on, on this. We'll leave details to the Q&A. The conclusion overall, though, is that approximately 1/4 of sales and assets will follow Getinge in the spin-off, and roughly 1/5 of the EBIT and the operating cash flow. Again, this is based on rolling 12 months through the third quarter of 2015. We can move then to slide number 22, where you have an overview of the key financials.
As I said, they're all already in the press releases that have gone out, so I'll just point out some of the key figures here with the EBITDA margin. We change from 14.3% in overall Getinge Group today to 15.2% when the spin-off is completed. We will have a net debt-to-equity multiple of 0.71, and leverage will go down to 2.89, while cash conversion increases from 68.2% to 75.1%. We can move to the following slide, where you will see a little bit of the split between sales regions, business areas, and revenue categories.
The footprint of Getinge will continue to be rather well-balanced with 40% of sales going into EMEA, 40% into Americas, and 20% to Asia Pacific. Asia Pacific still being significantly smaller than the others, but with a very good growth potential than the for both Getinge and because of the lower level of penetration, but also because it's one of the markets with the highest underlying growth. From a business area perspective, we'll have relatively well-balanced business areas. Acute Care is slightly bigger than Surgical Workflows, and in terms of revenue split, almost a 60/40 between recurring revenue and capital equipment.
With that, we can leave the financials for now, and I'll move to the strategy part and talk a little bit about the highlights of the strategy reconfirmation process that we've been going through. So if we start that on page 25, a couple of the key building blocks here is focused on the offering as such, strengthening our offering in a number of prioritized segments, and I'll come back to those in a moment. Expand our presence to capture growth as well.
It's, it's a theme that's important to drive organic growth, and examples of this is, for example, our critical care ventilator business, where we have significant market share in the, in the Nordics, and much weaker in the, in the U.S., for example, where there is really significant, potential. Similar example with the endoscopic vessel harvesting that I was mentioning as, as a value example earlier, where, the, the vast majority of sales today go to the, the U.S. market, but the, the opportunity for improved healthcare is really the same in, in other geographic markets as well. So those are examples of, of way to, to drive increased, penetration and capture growth. The third leg here is, is about operational and, commercial, excellence, and, it largely contains what was previously called the Big Five.
All the different initiatives within Big Five are still intact, and we'll continue to work with this. We'll also additional focus on complexity reduction, where very little work had been done before, but it's extremely important that we work actively with our portfolio. We have a very large portfolio today with a significant portion contributing less than materially to sales and revenue for the group. With that, we can move to the following slide, where we have a breakdown of some of the sub-areas within Acute Care Therapies and surgical workflows.
You can see the different share of sales when it comes to critical care, vascular systems, cardiopulmonary, and cardiac systems, and the different growth rates as well, that when you combine them, adds up to 2%-4% on group level. Surgical workflows, a diverse portfolio, as you probably know already, with some really high-growth areas, like the integrated workflow solutions, which is basically our software business today. That's only 4% of the net sales today, but with very high growth and really great opportunity for further growth, and also we're combining this with the rest of our offer to really provide the value solutions to our customers.
You can see the numbers as well for Infection Control, the infrastructure part of our offer, together with Surgical Workflows, which is a significant portion of the portfolio, but with slightly lower growth rates. Life Science is about 20% of the Surgical Workflows sales today, with slightly higher than average growth opportunities, and I'll come back to Life Science separately in a moment. But if you look at the strategic actions going forward, we will try to be a bit more disciplined and prioritize harder between segments and products in our portfolio. This means as well that we'll have a more focused effort when it comes to R&D.
Some areas will get significantly more than others, and we will also complement the portfolio selectively through M&A. Another key area that's becoming important is strategic partnerships with the increased complexity and the challenges for the healthcare systems. It becomes critically important for all players to find their role in the ecosystem that surrounds the hospital. And that's really an area where I think Getinge can play a key role with a number of key partners in world.
As I touched on a moment ago, when it comes to the long tail of products that we have, we need to be a bit more stricter in pruning this as well, because the cost of maintaining a big portfolio will go up when the new Medical Device Directive is implemented. So this is a key operational challenge for us as well. Altogether, we believe that this will gradually take us back to profitable growth, and at least in the first step, in line with the overall addressable market. With that, we can move to slide number 27, and we talk a little bit about a bit more in detail about the focus areas going forward. We've segmented the market in two basic dimensions.
One is the depth of engagement, which is based on the current position that we have in the market, and a combination of the attractiveness of the particular sub-segment going forward. We also have a geographical spread on this split on this, where we divide between very high income markets, high income, and middle and low income markets. And we do this really by sub-region, not just the overall macro regions, but as you can see on this picture. And we define our offer into the hospitals in three main categories.
Our core, these are the strongholds that we really will protect at almost any cost, and the green ones are build opportunities where we have a foot in the door today, but we're not a dominant player, but we really see an opportunity to become one. And then there are a couple of categories that we will treat a little bit more selectively and either pursue a niche strategy or look at divesting or just add as a follow-on effect due to an investment in some adjacent area. But it's not going to be a focus area for us going forward. With that, we can move to page 28.
That's why this is an overall picture of the system around our offer, around hospitals and combining this with our offering. As I mentioned earlier, about 90% of our sales will go to hospital, and the vast majority goes into a really specified area in the hospital, close into and close by the operating room, which generates about 80% of the value in the hospital. So it's hugely important for hospitals from a financial perspective, and it's also important for the well-being of the patients, obviously. So by delivering both infrastructure and efficient therapies into this area, we believe we can make a significant difference, and this is what we're doing today, and we'll continue to do in a slightly more focused and driven way.
We're also using our long-earned knowledge to tie the workflows together, not only in each room, but also between the rooms to help really our hospitals and our customers with productivity improvements, which is really key for the healthcare systems going forward. So in the picture, you can see our offering in each room and our global position when it comes to the offering in each room. The span is there because we have our position differs a bit depending on geographical markets, so that's why you see spans of 1-3 and 2-3, and so on, and so on.
We can move on to page 29, and I'll illustrate a little bit more what we mean with this from our specific perspective. There are a couple of key strategic themes related to this picture. So one of them is to take advantage of digitalization, to combine both hardware and software into complete offers for our customers, and really manage the flow of equipment through the hospital and also patients. The two main reasons for a canceled operation today in hospital, it's either that the right equipment is not there or that the patient isn't ready. So this is really a key cornerstone when it comes to hospital productivity that we believe we have a compelling offer for.
You can also see from the picture that we will reinforce a leading position in the U.S. and Western Europe within the Central Sterile Supply Department and the operating room. And this is through a combined effort with new innovation, but also defending our premium position by expanding the value portfolio. And when it comes to the value portfolio, you can see that on medium and low-income markets, we will continue to target the CSSD, the operating room, and the ICU with a value segment approach, and it also help to defend the overall leadership in some of the higher income markets. Endo suite is a different ballgame here.
We have a weaker position today, and requires partnership and M&A to really be seen as a strong end-to-end partner. A couple of other things you can see in this picture is that, if you look, for example, at the very high income part of the ICU, it's a concrete example where, for example, ventilator and monitoring needs can be driven further in the U.S. This is the way that we try to work with Australia. It's obviously a lot more behind this, but it gives you a snapshot and a flavor of the focus areas going forward.
We can then move on to page number 30 and look at this from a regional perspective as well. There are actually no vastly or really significant differences between things from a geographic perspective. We believe we have a good future in all our current geographic markets. APAC will obviously grow a bit faster than the others, followed by Americas and EMEA. But also EMEA will continue to be a significantly important market for us, going forward. The main shifts when it comes to dynamic is more the different tiers of customer. We traditionally have a very strong position in the premium segment, and this is something that we will for sure defend and continue to build.
But the larger and faster-growing part of the market is the value segment, and here is an area where we have started to develop and run a bit faster now with expanding our portfolio to really make sure that we stay competitive also for this part of the market. With that, we can move to page 31, and I will touch a little bit on one of the things that became evident as we reached the end of the strategy reconfirmation process was that we had an organization that was a little bit too complex for our needs post-spin-off, and given the strategic objectives that we have for the group.
So two main things that we decided to do from first of October already was to remove the functional unit that's been called supply chain in the group structure and move production the manufacturing facility back into the business areas where they were before. But maintain logistics and sourcing on a central level, because this is the area from supply chain where we really think that we can generate synergies. This will also help improve visibility and accountability for results in the business area, and this, I think, is something that we had partly lost in the first one, getting a transition.
The second major change is a simplified sales organization, where we've had the 3 macro regions, Americas, EMEA, and Asia Pacific. And here we could see that a lot of our customers are starting to operate also outside or between these geographic areas. And we also could see that internal, from an internal perspective, we have much better possibilities of providing best practice across the world. So we decided to move to one global sales organization. So these are the two significant organization changes. With that, we can move to slide 32. And another consequence of the strategic review is that we have decided to, from January 2018, to make life science its own business area.
The rationale behind this, it's a part of the business that uses the same base technology as we do in infection control, but it has different customers, and these products we offer in life science is more complex, more system-oriented. So what we felt that we could better realize the growth opportunities in this part of the business by making them a standalone business area. So it's a roughly SEK 2 billion business today, but as you saw on one of the previous slide, good growth potentials in the range of 3%-5%. Slightly different way of working with customers. Customers here are mostly pharma, pharmaceutical manufacturers and not hospitals, but the same base technology.
So, this is the main rationale for making it an independent business area. With that, we can move to the next slide. We can jump all the way to slide number 34, where we'll talk about the financial targets. The board of directors of Getinge has decided on the updated financial targets for the group. The most important thing for the group at the moment in the coming years is to return to proper organic growth. So we've set a target of 2%-4% average growth for the coming years. This should be seen as midterm targets as well.
And this is really in the first step to, to get back to grow in line with the, with the market, which is critically important, for us. It's important, though, that the growth is, not at the expense of, of profitability, so we-- the board has also decided that we will have an earnings per share, target, and this target is to grow our earnings per share with at least 10%, average, over the coming, coming years. So these are the two financial targets that Getinge Group will have from 2018, onwards. The board has also decided to maintain the dividend, dividend policy, which is to distribute 30%-50% of the net income of the, of the group.
With that, that concludes the strategic overview and the financial targets for Getinge, and we move to the summaries for the respective companies, and I will let Joacim start with the summary for Arjo.
Thank you, Mattias. Then, let me give you just a few key dates again for the spin-off and the short summary. The notice for the extra general meeting was issued today, and is planned to be held on December 4th. The first day of trading, as Mattias previously said, in Getinge share, excluding the right for Arjo, is on December 7th, and the record day, December 8th, and the first day of trading in the Arjo share is December 12th.
As said earlier, we have developed a strategic intent for the Arjo business with the intention to invest to become the global market leader in long-term care, while retaining a strong market position in acute care. The ambition is also to achieve a position as a preferred solutions provider with clear, positive financial outcomes for our customers that contributes to sustainable healthcare system.
For this, we have a solid plan developed as previously presented. The decided midterm financial target is set to an organic net sales growth of 2%-4%, and an EBITDA CAGR of above 10%, and cash conversion in midterm above 70%. And finally, the board have adopted a dividend policy, where the aim is for the dividend to correspond to 30%-50% of net income. Thank you, and I very much look forward to meeting a lot of you during the upcoming roadshows. Mattias, back to you.
Thank you, Joacim. And just a very brief summary then from Getinge perspective, since we're a little bit short on time for the Q&A. Financial targets, average growth 2%-4%, earnings per share growth over 10%, and we maintain the dividend policy that we currently have for Getinge. A number of strategic priorities that we've just gone through. I'd just like to highlight that the enablers for this one is the organization adjustment when it comes to production and sale. This has already been accomplished and implemented from the first of October, so we're well set up for 2018 now to really work in the way that we believe is best for the future.
It does bring much more clarity and accountability and also customer centricity through the value chain and through the whole company. But it doesn't compromise our possibility to continue to carve out synergies that we have in the group and the size of the groups. So with that, I thank you for the attention, and we move on to the Q&A session from here.
Thank you. If you wish to ask a question, please press star one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We'll now take our first question from Ed Ridley-Day from Redburn. Please go ahead.
Good morning. Can you hear me?
Yes, we can hear you.
Great, thank you. Thanks very much indeed for the guidance that you've given. Firstly, can I ask, just regarding the Big Five initiative that you previously highlighted for the core business, the legacy business, can you give us any more color on where you stand on that, and how we should think about the continued synergies that you've highlighted from that program? I mean, we know what the old guidance was for the combined company. Clearly, to deliver the more than 10% EPS growth, you'll be continuing with that program. Can you give us more color on where you stand and what you hope to get to in terms of total cost savings from that program?
Yeah, sure. Yeah, sure. No, it, the program has continued and will continue as well, in line with the plan. The main difference from when it was communicated in 2015 is that we see a big need to channel the savings into primarily quality remediation, which is always a big issue for us. Into R&D, to really drive our strategy in the right way going forward, and also to build the sales organization properly. So I think the program as such, the content is still very relevant. And we will continue. We'll also start working with complexity reduction. That was part of the program, but never had any improvements assigned to them.
But we will not give any detailed guidance on exactly how much we'll flow through to EBIT, but the program will continue in its current form.
Okay. Okay, thank you. I understand. And just a quick follow-up: In terms of your, the potential M&A that you've highlighted, and sort of focusing on which areas you want to focus on, can you give us a little bit more detail on that? I mean, could it appear Critical Care might be an area, monitoring, obviously in the ICU. Would that be the right takeaway, or are there other areas that you might be wanting to-
Yeah, that's for sure one correct takeaway. Critical Care is absolutely one of the business where we have already a strong momentum, and we really see the opportunity to become very dominant across more geographies than we are today, so this is absolutely a key theme. We have mentioned before that the Value segment is another area where it may make sense to add to the portfolio. So those are a couple of examples, but we're not going to give detailed guidance on this. It's obviously a confidential process in many ways.
Thank you. Thanks very much.
We will now take our next question from Inês Silva, from Bank of America Merrill Lynch. Your line is open. Please go ahead.
Hi, good morning. Thank you so much for taking my questions. First of all, just a quick clarification on the targets you've set, both for Arjo and Getinge, today. Apologies if I missed this, but are these targets meant to be seen by us as sort of yearly, i.e., this is per annum? Or because you've said average, and I'm not sure how to take this, so how should we think about this in individual years? Or is it sort of in the next 3-5 years, you expect an average of more than 10% earnings growth? And then-
Yeah, okay
my second question. Sorry, go ahead.
Yeah, no, go, go ahead. Go ahead with the second question.
I just wanted to follow up on just the previous question from Ed on acquisitions. Because can you just clarify more than the segments that you'd be looking at, what kind of assets are you looking at? And is it bolt-ons, or would you also consider bigger M&A? Thank you.
Okay, I can start and speak on behalf of Getinge. The targets, they are average over time. So if we have a lower growth, for example, in EPS one year, this will have to be made up in the following years. It's meant to be seen as average growth over time. But before I let Joacim speak on behalf of Arjo, I'll comment on the M&A perspective as well. And I have to reiterate that we don't give more details on this. We have a number of segments that are highly prioritized for us. And so for sure, bolt-on acquisitions is one logical way of doing this, and that I can confirm is something we're looking at.
We could also look at bigger M&As if these opportunities arise, but it's obviously less likelihood than bolt- on acquisition.
Yep. And if I then take the, the short answer on the Arjo is the same as for Getinge. It's on an average base with 2017 as basis year.
Okay. Thank you very much. So this average, what is the year range to which we should be looking at to calculate the average, please?
Well, we don't, we don't give, we don't give a forecast on, on earnings, as you, as you know, and, we've maintained for the group to maintain the, the guidance we've given earlier of, the slight moderate, growth, which will be in the range of 0%-1%.
You mean that's for fiscal year 2017?
For fiscal year 2017, yes.
Yeah, yeah. No, sorry, but when you say average,
Yeah.
What time range- What, how many years ahead should I be looking at?
We've only stated medium term here. I think it's important for us that we put these targets out now with the medium term view. We'll update them as we go along, but it's extremely important for both companies, I think, to change the trend that we've been on a really great growth start to move towards market growth. So we'll update them as needed, but they are the midterm targets that stand now, and we haven't put a timeline for it, so.
Okay. Okay, thank you very much.
I will now hand the call back for any additional or closing remarks.
All right, thank you very much. Thanks again, everyone, for calling in today. I apologize that it was a little bit brief, the Q&A session here, but we will have time to meet many of you in the coming weeks, both Arjo and Getinge, and we'll for sure be able to answer a lot more question, questions during those meetings. So, thank you very much for your attendance today, and have a good rest of the day.
Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.